Edinburgh,Scotland, UK

Resolving Construction Disputes in the UK: Adjudication

By Steven Docherty, Wright, Johnston & Mackenzie LLP

In the UK, many construction project disputes are decided by adjudication – a form of dispute resolution. The aim is to provide a quick and costeffective mechanism for improving cash-flow during a construction project.

Before 1996, disputes between parties in a construction project were decided by the courts or in arbitration. The costs meant wealthier employers and contractors were at an advantage. Subcontractors often struggled to cope with the costs, especially where the dispute was what caused their lack of funds, and “Pay When Paid” clauses (where a main contractor would only pay a sub-contractor once it had been paid) were allowed. As a result, many small companies were unable to seek payment, and in some cases, had to close down.

The adjudication procedure has changed the balance of power. The right to adjudicate can’t be removed by contract. An adjudication can be started at any time in a construction project.

The adjudication process is swift and cost-effective. An adjudicator usually has to reach a decision within 28 days, and the cost awards are more restricted than in court or arbitrations. Typically, a losing party will not only be liable to reimburse the adjudicator’s costs but has to pay their own costs (win or lose).

Importantly, the decision of an adjudicator is binding on parties. This, and the speed of the procedure, has led to a “pay first and argue later” ethos – even if a party thinks the decision is wrong, it must usually still be implemented. A later court may decide differently, but the adjudicator’s decision binds parties in the meantime.

An adjudicator’s decision can usually only be challenged in court if they’ve breached natural justice or exceeded their authority, but those cases are rare. Courts tend to enforce adjudicators’ decisions wherever possible. In addition to payment disputes, adjudication is now used to decide a much wider range of issues and is a useful tool in the management of UK construction projects.

Steven Docherty

Steven Docherty

GGI member firm
Wright, Johnston & Mackenzie LLP
Law Firm Services
Glasgow, Scotland
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Wright, Johnston & Mackenzie LLP is an independent Scottish law firm offering the full range of corporate, dispute resolution, and private client services. They are GGI’s sole Scottish member.

Steven Docherty is Head of Conflict Resolution, specialising in construction and property disputes, as well as debt recovery and insolvency. He is a member of the Chartered Institute of Arbitrators.x

Published: Litigation & Dispute Resolution Newsletter, No. 12, Spring 2020 l Photo: Have a nice day - stock.adobe.com

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